It is possible to get approved for an FHA loan with bad credit . However, it is important to note that your credit score will affect your ability to qualify for a loan, as well as the interest rate you will pay on your mortgage.
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The fha loan credit score requirements
The Federal Housing Administration (FHA) does not issue loans, but instead provides protection through mortgage insurance. If a borrower defaults on an FHA loan, the lender is compensated by the government. This enables lenders to offer loans to borrowers with less than perfect credit and fewer resources for down payments. In order to qualify for an FHA loan with bad credit, you will need to show a solid employment history, have income that is verified by an automated system, and make a minimum down payment of 3.5 percent of the home’s purchase price.
There are also credit score requirements for FHA loans. The minimum credit score for an FHA loan is 580, but if your score is below that, you may still be eligible if you can show that you have at least 10 percent equity in the home. You will also need to have a strong employment history and show that your income is verified by an automated system. If you can meet these requirements, you may be able to get an FHA loan with bad credit.